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CESR proposes changes to MiFID to improve securities markets’ functioning, transparency and investor protection
July 29, 2010--CESR publishes today the first set of technical advice to the European Commission (Commission) in the context of reviewing MiFID, the Markets in Financial Instruments Directive, which entered into force in November 2007. This covers CESR?s advice on equity markets (Ref. CESR/10-802), non-equity markets transparency (Ref. CESR/10-799), transaction reporting (Ref. CESR/10-808) and investor protection and intermediaries (Ref. CESR/10-859) as well as part of the responses (Ref. CESR/10-860) to the request for additional information in relation to the review of MiFID that the Commission presented to CESR in March 2010.
The advice that CESR puts forward is both extensive and highly significant, tackling the key issues that CESR and market participants have identified as needing action. They aim at improving pre- and post-trade transparency and the orderly functioning of the markets, strengthening investor protection and ensuring securities regulators are equipped with tools which enable them to effectively monitor trading. CESR?s recommendations take into account market developments since MiFID was originally drafted. Importantly, if taken forward by the Commission, they would impact many elements of securities market regulation and constitute a major change in the EU regulatory landscape.
The development of the advice has benefited from a number of public consultations, open hearings and other types of exchange of views in a range of meetings and workshops organised with market participants as well as with representatives of retail investors. These contacts have been pivotal in shaping CESR?s advice.
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Source: CESR
Troika Dialog to list ETF in Russia
July 29, 2010--Troika Dialog asset management plans to unveil an ETF tracking the RTS Standard index on the RTS exchange in Russia on August 1.
The launch of Troika Dialog - Index RTS Standard represents the firm's first index fund offering, and marks the first such fund on Russia's collective investments market tracking the RTS index.
The underlying RTS Standard index comprises securities in the 15 most liquid and highly-capitalised firms on the Russian equity market. These include Gazprom, Sberbank and Lukoil.
The fund's liquidity will be driven by Troika Dialog Investment Company as market maker for the shares. The firm says the target bid-ask spread is 5-10 basis points.
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Source: ifaonline.com
Global Equity Index & ETF Research : Holiday calendar in full swing, another quiet week
Weekly European ETP Market Roundup
July 29, 2010--Net Cash flows
Major equity indices edged higher in the week that ended July 23rd 2010. The Euro Stoxx 50 index rose by 2.8%, the DAX rose by 2.1% and FTSE 100 fell by -0.5%. The price of gold (USD) continued to fall, -0.1% to the end of last week and -2.4% by July 27th.
Despite generally positive market sentiment, cash flows grinded to a complete halt. Total European ETP cash flows registered at just €142 million for the past week. In addition to lingering questions about the strength of the economic recovery, the very slow cash flows mainly reflect subdued investment activity due to the European summer holiday calendar.
European Equity ETPs netted €75 million of outflows, compared to the €650 million of inflows taken in last week. Commodity cash flow traffic was again consistently slow this week, taking in a mere €58 million of inflows. Fixed income continued its positive flow trajectory with €165 million of inflows over the week.
Perhaps the most noteworthy cash flow news for the week has been the net slight outflows from gold, totaling €52 million. While the absolute number does not amount to much, it continues the trend down pointing to slowing gold inflows. Whether this is a trend or a result of the overall slowing cash flow activity, it is yet not clear. The majority of this week’s fixed income inflows (€129 million) went into ETFs tracking corporate indices. All other fixed income categories saw very little activity.
New Listings
Three new ETFs were listed this week and 34 were cross-listed. Emerging markets continued to be the new launches theme this week, with two of the three ETFs tracking China and overall emerging market indices.
Comstage was the most active ETF provider for the week, with two new listings and 32 cross listings on the Swiss Stock Exchange. Lyxor continued its cross listing activity on the BME (Bolsas y Mercados Españoles), with two additional commodity ETP cross listings this week.
Turnover
Consistent with the general July calm trading environment, average daily on-exchange ETP turnover declined 3.7%, maintaining its downward slope of the previous weeks, totaling €1.8 billion.
AUM
Rising equity markets contributed to the European ETP AUM rising by 2.2% to €196.5 billion. The equity segment of the market saw the biggest rise, 3.1%, with the commodity segment rising by 1.7% and fixed income by 0.5% respectively. European ETP AUM growth for 2010 YTD remains robust, registering at 15.5%.
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Source: DB Global Equity Index & ETF Research
FSA consults on changes to its Remuneration Code
July 29, 2010--The Financial Services Authority (FSA) today announced plans to update its Remuneration Code to take on board remuneration rules required by the Capital Requirements Directive (CRD 3) and the Financial Services Act 2010 (FS Act).
The FSA also reports on the implementation of the Code so far, lessons learned from last year’s implementation and discusses progress made in achieving international alignment.
The FSA’s current Code applies to the largest banks, building societies and broker dealers. However, CRD3 will bring over 2,500 firms within the scope of the Code. These include all banks and building societies, asset managers, hedge fund managers, UCITS investment firms as well as some firms that engage in corporate finance, venture capital, the provision of financial advice and stockbrokers.
The FSA does not intend the final rules to be super-equivalent to the CRD3 requirements unless required to do so by UK legislation.
view the CP10/19: Revising the Remuneration Code
Source: FSA.gov.uk
July 2010: Business Climate Indicator for the euro area picks up
July 29, 2010--Important notice: since May 2010 business surveys data are classified in accordance with an updated version of the Nomenclature of Economic Activities (NACE rev. 2) causing a potential break in series at this date
In July, the Economic Sentiment Indicator (ESI) edged up to 102.2 (by 1.9 points) in the EU and to 101.3 (by 2.3 points) in the euro area. These results are strongly influenced by markedly positive readings in Germany.
The majority of Member States reported improvements in sentiment.
Among the largest Member States, Germany registered the most significant increase (+4.0), followed by France (+2.6), Poland (+1.9) and Italy (+1.7). Improvements were less pronounced in the UK (+1.4) and the Netherlands (+1.2). In contrast, sentiment declined in Spain (-2.2).
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Source: Europa
July 2010: Economic Sentiment Indicator edges up
July 29, 2010-- In July, the Economic Sentiment Indicator (ESI) edged up to 102.2 (by 1.9 points) in the EU and to 101.3 (by 2.3 points) in the euro area. These results are strongly influenced by markedly positive readings in Germany.
The majority of Member States reported improvements in sentiment. Among the largest Member States, Germany registered the most significant increase (+4.0), followed by France (+2.6), Poland (+1.9) and Italy (+1.7). Improvements were less pronounced in the UK (+1.4) and the Netherlands (+1.2). In contrast, sentiment declined in Spain (-2.2).
Sentiment in industry, which increased by 2 points in both regions, was the main contributor to the overall improvement. Most respondents in this sector reported substantial improvements in their order books. However, managers were cautious on their production expectations. The quarterly manufacturing survey indicates an increase in capacity utilisation. It now stands at about 77% in both the EU and the euro area, though still below the long term average (81%).
As indicated in the flash estimate released earlier, confidence among consumers regained momentum (+3 in the euro area and +1 in the EU). More optimism about the general economic situation and very significant easing unemployment fears in Germany contributed to the overall improvement. Confidence in services improved by 2 points in the EU and the euro area, driven by brighter assessments of demand and the business situation over the past 3 months. Sentiment in the retail sector increased by 2 points in the euro area and by 4 points in the EU, mainly owing to upbeat business expectations in the UK and in Germany. Sentiment in construction remained broadly unchanged in both regions.
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Source: Europa
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 23-Jul-10
July 28, 2010--Last week saw US$226.7 Mn net inflows to STOXX Europe 600 sector ETFs. The largest sector ETF inflows last week were in Industrial Goods & Services with US$103.0 Mn and Utilities with US$50.0 Mn while Banks experienced net outflows of US$87.2 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$457.8 Mn net outflows. Banks sector ETFs have seen the largest net outflows with US$237.4 Mn, followed by Telecommunications with US$212.2 Mn while Media has experienced the largest net inflows with US$232.8 Mn net new assets YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in all 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
India's National Stock Exchange and London Stock Exchange Group sign Letter of Intent
July 28, 2010--Agreement to explore feasibility of mutual licensing of indices, enabling access to each other’s markets
Training and education on SME markets
London Stock Exchange Group (LSEG) and India’s National Stock Exchange (NSE) today signed a Letter of Intent to evaluate joint strategic business opportunities, and to co-operate together more closely in the future.
As part of the Letter, both exchanges declared their intent to explore the feasibility of an agreement whereby FTSE Group may licence the FTSE 100 Index to the NSE, and whereby the NSE may licence the S&P CNX Nifty (Nifty 50) to LSEG for the purpose of issuing and trading options and other index contracts.
t also conveys the intention of both parties to evaluate other joint strategic opportunities, such as allowing access to each other’s market as and when regulatory framework permits.
Additionally, the two signatories will explore the possibility of holding joint training & education courses and seminars with a particular focus on Small and Medium sized Enterprises (SMEs).
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Source: London Stock Exchange Group
Banks plan for loss of eurozone member
July 28, 2010--Banks have started early-stage planning to deal with the potential fallout on the derivatives and bond markets of a European country being forced to leave the euro.
After having received queries by some banks about the impact of such an event, the body representing the swaps and derivatives industry last week contacted some of its members to form a group to consider what they may need to do if a eurozone state is ejected.
While those close to the process believe the likelihood of such an event is remote, the sovereign debt crisis of recent months has led banks and other firms to start questioning what impact it could have.
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Source: FT.com
Credit Suisse issues new hybrid bonds
July 28, 2010--Banks’ old-style hybrid capital is to make a high-profile return as finance directors take a bullish line on the likelihood that regulators will continue to allow these controversial bonds to count towards top-notch tier one capital.
Credit Suisse is today set to become the third bank in two months to sell new hybrid bonds – debt with equity-like features – following offerings from HSBC and UniCredit.
Prior to that there had been a sustained period of no tier one hybrid issuance, in part because banks were convinced that regulators were set to outlaw the instruments.
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Source: FT.com
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